I aitn't dead

Yet. But I have been slacking off mightily. The new term is swimming along. Finance is currently a bit of a bore and if it reaches the same level of syllabus coverage and depth as CT2 is supposed to, I will frankly be surprised.

In the meantime, an interesting article from the BBC on questioning your assumptions.

Edit: Dur-boy here forgot to include the href to the above link, and cannot now remember what it referred to. Oh well. Tiddly pom.

One question

Why, oh why, is it called the "Yellow book" when it is so very clearly orange?

The new gold standard

An interesting piece from the Economist's Buttonwood blog talks about currency markets. The main point of the post is that in a world of low inflation and interest, relative movements in exchange rates are likely to be amplified. But the interesting point to me was the suggestion that the introduction of the Euro has created a new gold standard: smaller Euro-economies are forced to keep competitiveness with the big beasts of Germany and France, or they are forced to take the same measures that gold standard economies did in the thirties. In essence, devaluation is removed as an option and instead they are forced to shed jobs.

Happy New Year: catchup time

Celebration and the resultant recovery has taken up much of my time recently, to the detriment of blog posting. Time, then, for a brief round-up of interesting things that have come my way recently.

• Being an actuary still one of the best jobs around.
• The EU will probably never have a rational system of government.
• Bond yields at the moment are closely correlated with the relative probabilities of who will win the General Election, and what their approach to deficit reduction will be. Today's auction of £4bn of short dated bonds went well and was oversubscribed by some way.
• Derivatives are supposed to make it safer to invest in an asset by parcelling out the risk. However, this paper from Princeton demonstrates that it is fairly easy to construct a seemingly simple derivative whose behaviour requires unattainable amounts of computation to model. In short, you can booby-trap a derivative.
• A solid analysis of operational risk management in the light of the economic experience of the last few years. It was commissioned by the main North American actuarial bodies, and is a solid and not overly technical read.
• Whatever your problem, the chances are it's been solved before. Take note, TSA.
• And of course, some 2010 predictions.